How the Government Should Manage Natural Disasters
Natural disasters are a difficult reality. Regardless of our beliefs, these disasters such as earthquakes and floods have a huge impact on our lives in every part of the world. Every year, people all over the world face several disasters. The lives of many of these people are completely destroyed as a result of these […]
Inventory Turnover As Indicator of Health of Inventory and Business
Inventory management as well as Supply chain operations are often overlapping and hold the key to the success of sales operations. In all of the businesses be in automobile, manufacturing, pharma or retail industry, status of inventory reflects the health of the business. Inventory operations have two key elements namely Inventory System and Physical operations. […]
Should Infrastructure Spending Be Centralized?
Donald Trump has raised the issue of America’s crumbling infrastructure during his election campaign. He has periodically mentioned that American economy needs a bout of infrastructure spending. Estimates state that the infrastructure overhaul will cost the Trump government more than $1 trillion. However, the United States is already deeply in debt. Even though they have […]
What Is China’s Deleveraging Strategy?
China has been the fastest growing economy in the world for the past few decades. The Chinese economy continued to grow even during the recession period. Many economists believe that a growing Chinese economy was a gift to other countries during the slowdown. Since the Chinese economy was growing, international trade was flourishing, and other […]
BPI – Process Walk Through and Process Measurement Analysis
Business Process Improvement projects can be applied to any and every process in any industry. Using BPI it is possible to increase the efficiency of any and every process. Processes though designed well, can become inefficient over a period of time. Besides, processes need to be subject to review periodically to determine the efficiency as […]
Gone are the days when outsourcing meant a steady stream of jobs being shipped to India. Now the trend is for Indian companies to create jobs in the West. This phenomenon which is gathering pace in recent times is known as reverse outsourcing or the trend of Indian IT and BPO companies opening offices in the US and Europe to employ locals there.
This reverse outsourcing is estimated to have created nearly 300,000 jobs in the US. This is good news for Indian IT and BPO companies because they are battling the negative perceptions about outsourcing which is seen as a phenomenon that takes away jobs instead of creating them. Especially when one considers the fact that in a presidential election year, the anti-outsourcing rhetoric reaches a fever pitch, so this trend is welcome for the positive news it generates about Indian companies.
Moreover, other aspects like rising wages in India in the IT and BPO sector and the wild fluctuations in the foreign exchange market make Indian companies to contend with expenses that are mounting by the day.
The point here is that though the earnings of the Indian IT and BPO companies are in Dollars, they need to pay their wages in Rupees and hence, they have to absorb the costs of rising wages. So, it makes sense for the Indian companies to open offices and subsidiaries in low wage states like Ohio in the US and in the Czech Republic in Europe where they can benefit from lower costs and at the same time create jobs for locals. This double whammy benefit has indeed raised the image of Indian companies and has given the CEO’s of Western companies something to cheer about especially when they have to appear before committees and commissions made up of politicians to defend outsourcing.
The other aspect here has to do with Western companies preferring to do business with companies near shore or the emerging trend of near shoring. What this means is that many Western companies want to have their back office operations outsourced to locations that are nearer to their headquarters and hence, Indian companies are increasingly opening offices in places like Mexico and Ireland to cater to European clients and US. Though Indian companies have always had a significant proportion of their employees’ onsite, the trend of hiring locals instead of sending Indian employees onsite is picking up.
Finally, the fact that Indian companies have to contend with competition from Philippines and Vietnam has made them realize that they need to offer something more than the usual to grab market share and hence, the latest innovation is reverse outsourcing.
In conclusion, while it is too early to state whether this trend is sustainable in the longer term and whether it can ramp up considerably, the gains from this trend is that it has given an entirely new dimension to the practice of outsourcing and has the potential to be a game changer.
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